Court ruling: Cryptopia exchange users are entitled to their deposits

According to a recent court ruling, the users of New Zealand-based Cryptopia exchange are entitled to receive their deposits. This ruling concluded the ongoing legal case between the exchange and its users over the ownership of digital assets. In his judgment, Justice Gendall J at the High Court in Christchurch classified digital currencies as “property” under Schedule 2 of the country’s Companies Act of 1993 as they were held in individual accounts.

The Justice stated:

I reach the conclusion that the cryptocurrencies here situated in Cryptopia’s exchange are a species of intangible personal property and clearly an identifiable thing of value. The argument that cryptocurrency is mere information and therefore it is not property is a simplistic one and, in my view, it is wrong in the present context. I dismiss it.

Back in January 2019, Cryptopia was hacked, forcing it to enter into liquidation. Though the exchange had only stated that it had suffered “significant losses,” a third-party blockchain analytics firm estimates the figures to be at least $16 million.

Cryptopia had more than 800,000 users with positive balance when it suspended its trading services and halted withdrawals. Apart from these people, 37 creditors and 90 shareholders are also seeking reimbursements. A court document noted that Cryptopia holds NZ$ 170 million (around $101 million) worth digital assets at present. Grant Thornton New Zealand, the official liquidator of the exchange, will oversee the fund distribution process.

According to the court filing, creditors might receive NZ$5.4 million ($3.2 million) from the exchange funds. New Zealand’s tax department is also seeking NZ$5 million ($2.9 million) as the exchange’s tax dues.